ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, January 22, 1996 TAG: 9601230028
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: MONEY MATTERS
SOURCE: MAG POFF
Q: If an estate exceeds $600,000 and the excess over $600,000 is willed to the heirs individually, does this eliminate the tax or does the will have to be to charity?
A: You cannot escape taxation merely by splitting up the estate among many different heirs, according to Charles F. Equi Jr., a certified public accountant with the Roanoke firm of Budd, Ammen & Co. The tax is on the estate, not on the heirs.
But if you structure your will properly, Equi said, there is a possibility of handling the money through trusts and the like that could reduce or eliminate taxes on the excess. You should see a lawyer who is experienced in trust and estate work.
If you give your money to charity, Equi said, you may be able to escape estate taxes.
In fact, there is a way to give your money to charity, while you are alive or when you die, and still have benefits for you and your heirs. You should contact your attorney.
Defining sectors
Q: I saw an advertisement in Barron's from the Philadelphia Stock Exchange referring to the Sectors Index Options trade. The advertisement was selling "our revolutionary new Super Cap Sector (HFX)'' which, it said, gives you America's most highly capitalized corporations: AT&T Corp., Coca-Cola Co., Exxon Corp. General Electric Co. and Phillip Morris Cos. Inc. It said these stocks are among the most widely held, so the Super Cap Sector can "put the stock market at your fingertips." It said the index options allow you take advantage of market movements while limiting risk and eliminating the need to juggle stocks in your portfolio.
What are sectors? What is a sectors index options trade? Why is it on the Philadelphia Stock Exchange? What is a Super Cap Sector (HFX)? Is this an investment worth the effort of looking into?
A: Tyler Pugh, senior vice president and branch manager of Wheat First Butcher Singer in Roanoke, said a sector is any segment of the market that is measurable and can be defined. In the case of this advertisement, the segment or sector consists of the stock of the five companies listed by the sponsor. The sponsor merely gave it the name of Super Cap Sector. The letters - HFX - are its trading name.
The sector, Pugh said, was created in order to provide a yardstick for trading options against those companies. The HFX Super Cap index was recently 425.32. On that particular day, the HFX Super Cap had gone down even while the Dow Jones industrials rose, so the index can move separately from the underlying stocks that it follows.
The sector could have been traded on any stock exchange, Pugh said, but the one in Philadelphia has a large trade in options. The sponsors merely designed and created their vehicle there.
Pugh said the sectors trade is complicated, difficult to understand and carries some risk. People use options as an attempt to get the same performance as the underlying stocks but with a much lower investment. The sectors, Pugh said, are more volatile than the underlying stocks.
Whether you choose to invest there depends on your tolerance for research and risk. But do your research, and never invest in something you don't understand.
LENGTH: Medium: 65 linesby CNB